Enterprise Products Partners L.P. Equity Offering February PDF Free Download

Enterprise Products Partners L.P. Equity Offering February 2005

Offering Summary Securities Offered: Over-Allotment Option: 10,000,000 Units 1,500,000 Units Last Reported Price: $27.24 per unit (as of 02/04/05) Current Distribution / Yield: $0.40 quarterly ($1.60 annually) / 5.9% Tax Deferral: >90% through December 31, 2007 Expected Pricing: February 10, 2005 Use Of Proceeds: Ticker / Exchange: Permanently reduce borrowings under our 364-day acquisition credit facility and general partnership purposes EPD / NYSE All rights reserved. Enterprise Products Partners L.P. 2

Forward Looking Statements This presentation contains forward-looking statements and information that are based on Enterprise s s beliefs and those of its general partner, as well as assumptions made by and information currently available to them. When used in this presentation, words such as anticipate, anticipate, project, project, expect, expect, plan, plan, goal, goal, forecast, forecast, intend, intend, could, could, believe, believe, may, may, and similar expressions and statements regarding the contemplated transaction n and the plans and objectives of Enterprise for future operations, are intended to identify forward-looking statements. Although Enterprise and its general partner believes that such expectations e reflected in such forward looking statements are reasonable, neither it nor its general partner can give assurances that such expectations will prove to be correct. Such statements are subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those Enterprise anticipated, estimated, projected or expected. Among the key risk factors that may have a direct bearing on Enterprise s s results of operations and financial condition are: All rights reserved. Enterprise Products Partners L.P. 5

Forward Looking Statements (cont.) Fluctuations in oil, natural gas and NGL prices ; A reduction in demand for its products by the petrochemical, refining or heating industries; A decline in the volumes of NGLs delivered by its facilities; The failure of its credit risk management efforts to adequately protect it against customer non-payment; Terrorist attacks aimed at its facilities; The failure to successfully integrate any future acquisitions; anda The failure to realize the anticipated cost savings, synergies and a other benefits of the merger with GulfTerra. Enterprise has no obligation to publicly update or revise any forward rward-looking statement, whether as a result of new information, future events or otherwise. All rights reserved. Enterprise Products Partners L.P. 6

Forward Looking Statements (cont.) This presentation utilizes Non-GAAP financial measures. Please read Non- GAAP Financial Measures and Non-GAAP Reconciliations in the prospectus supplement for an explanation of gross operating margin and a reconciliation to operating income, which is the most directly comparable c financial measure calculated according to GAAP. We define gross operating margin as operating income before: (i) depreciation, depletion and a amortization expense; (ii) operating lease expenses for which we do not have the payment obligation; (iii) gains and losses on the sale of assets; sets; and (iv) selling, general and administrative expenses. Also included in this section of the prospectus is an explanation of EBITDA and a reconciliation of EBITDA to net income and operating activities cash flows, which are the most directly comparable financial measures calculated according to GAAP. We define EBITDA as net income or loss plus interest expense, provision for r income taxes and depreciation and amortization expense. All rights reserved. Enterprise Products Partners L.P. 7

Key Investment Considerations Strategically located assets serving the most prolific supply basins for natural gas, natural gas liquids (NGLs) and crude oil in the U.S. Leading business positions across midstream sector Greater cash flow stability from diversified fee-based assets following the recent completion of GulfTerra merger One of the strongest organic growth profiles in the industry Increasing cash distributions leading to superior returns Lower cost of capital than many of our competitors GP / Management s interests aligned with limited partners Experienced management team with substantial ownership All rights reserved. Enterprise Products Partners L.P. 8

Overview The largest publicly traded energy partnership (based on market capitalization) serving producers and consumers of natural gas, NGLs and crude oil Completed $6 billion merger with GulfTerra Energy Partners, L.P. in September 2004 Prior to GulfTerra merger, ranked 336th on Fortune 500 and 7th on o Forbes list of America s 25 Fastest-Growing Big Companies Only integrated North American midstream network, which includes natural gas and NGL transportation, fractionation, processing, storage and import / export services EPCO and affiliates own the general partner and 39% of EPD (after giving effect to this offering) Interests closely aligned with our public limited partners All rights reserved. Enterprise Products Partners L.P. 9

Integrated Midstream Energy Services Fees are earned at each link of value chain Production Platforms Natural Gas & Crude Oil Pipelines Gas Processing (Removes Mixed NGLs) NGL Pipelines NGL Fractionation (or separation) Storage & Distribution NGL Products Markets / Storage Ethane Isobutane NGL Storage Propane Normal Butane Natural Gasoline All rights reserved. Enterprise Products Partners L.P. 10

Proven Growth, Superior Returns Total Assets - $Billions $12 $10 $8 $6 $4 $2 $0 390% 290% 190% $0.7 $10.6 Jul-98 1999 2000 2001 2002 2003 2004E 382% Total Invested 63% CAGR Total Return Since January 1, 1999 158% Annualized Distribution Rate $1.75 $1.50 $1.25 $1.00 $0.75 350% 300% 250% 200% 150% $0.90 Total Return to New Investors 307% Cash Distributions $1.00 $1.10 $1.25 $1.38 10% CAGR $1.49 $1.60 1998 1999 2000 2001 2002 2003 2004 Rate at Year-End 90% -10% EPD Partnership Pipeline Median (1) Note: Assumes quarterly distributions reinvested. (1) Includes BPL, EEP, KMP, KPP, NBP, PAA and TPP -2% S&P 500 100% 68% 61% 50% 24% 27% 35% 0% IPO '98 Oct '02 Jan '03 May '03 Apr '04 Aug '04 Note: Total returns based on mid-point of each month and are as of February 4, 2005. All rights reserved. Enterprise Products Partners L.P. 11

Successful Merger with GulfTerra Created leading provider of midstream energy services with strong position in prolific deepwater Gulf of Mexico and Rocky Mountains Diversified and complementary businesses provide a natural hedge to effects of natural gas prices Extended integrated value chain to provide new organic growth opportunities Successful integration; $140 million of targeted savings largely realized GP distribution savings $55 million Interest savings of approx. $45 million G&A and operating cost savings of approx. $40 million Record 4 th quarter 2004 performance All rights reserved. Enterprise Products Partners L.P. 12

Enterprise Asset Base ROCKIES SAN JUAN MID-CONTINENT NGL Pipelines Natural Gas Pipelines Natural Gas Pipeline Under Construction Crude Oil Pipelines Fractionation Facility Natural Gas Processing Plant Storage Facility Import / Export Terminal Platform Platform Under Construction PERMIAN BARNETT SHALE MT. BELVIEU South Texas Gulf of Mexico All rights reserved. Enterprise Products Partners L.P. 13

Diversified Operations Gross Operating Margin by Segment Fourth Quarter 2004 NGL Pipelines & Services (51%) Natural gas processing plants & related marketing activities NGL fractionation plants NGL pipelines and storage 11% 12% 51% 26% Onshore Natural Gas Pipelines & Services (26%) Natural gas pipelines Natural gas storage facilities Offshore Pipelines & Services (12%) Natural gas pipelines Oil pipelines Platform services Petrochemical Services (11%) Propylene fractionation facilities Butane isomerization facilities Octane enhancement facilities All rights reserved. Enterprise Products Partners L.P. 14

Leading Business Positions Across Midstream Energy Value Chain Gas Gathering Gas Processing Raw Mix Pipeline Fractionate Salt Dome Storage Import Terminal Export Terminal Distribution Enterprise Duke FS Enterprise Enterprise Enterprise Enterprise Enterprise Enterprise Duke FS BP TEPPCO Koch TEPPCO Dow Dynegy Dow Williams Enterprise Koch ConocoPhillips Dow Dynegy ChevronTexaco ConocoPhillips BP Williams ChevronTexaco Dynegy Dynegy Trammo TEPPCO Oneok ExxonMobil Dynegy ExxonMobil Williams Koch ConocoPhillips ONEOK BP BP ConocoPhillips Kinder Morgan Devon ConocoPhillips ExxonMobil ONEOK BP ChevronTexaco Dynegy Devon ConocoPhillips Duke ExxonMobil Dynegy Dynegy Williams ONEOK ExxonMobil Measured by volumes, except for gas gathering (measured by pipeline ine miles) All rights reserved. Enterprise Products Partners L.P. 15

$2 Billion of Growth Opportunities MAPL / Seminole Expansion & Midstream Growth Opportunities 1 Bcf/d 50 MBPD 2005-2006 2006 SAN JUAN San Juan Gathering 130 MMcf/d 2004-2005 2005 NGL Pipelines Natural Gas Pipelines Natural Gas Pipeline Under Constr. Crude Oil Pipelines Fractionation Facility Natural Gas Processing Plant Storage Facility Import / Export Terminal Platform Platform Under Constr. West TX Pipeline Expansion 120 MMcf/d 2005 Indian Springs 120 MMcf/d 6 MBPD 2005 MB Fractionation 75 MBPD Dixie Pipeline MB Iso-octane octane 2005-2006 2006 2005 12 MBPD 2004-2005 2005 Independence Hub & Pipeline 850 MMcf/d 2005-2006 2006 Constitution O&G Cameron Highway Pipelines Pipeline 200 MMcf/d 500 MBPD 70 MBPD 2003-2005 2005 2005-2006 2006 All rights reserved. Enterprise Products Partners L.P. 16

Southern Green Canyon Value Chain Mont Belvieu Port Arthur Acadian Promix Neptune Texas City Cameron Highway Nautilus Manta Ray Poseidon Holstein Mad Dog Atlantis All rights reserved. Enterprise Products Partners L.P. 17

Independence Hub and Trail Toca Yscloskey Independence Trail Venice Independence Hub Designed to process up to 850 MMcf/d of natural gas production from six anchor fields Capacity to tie-back up to 10 additional fields 15 of 18 wells planned for anchor discoveries have been drilled Large resource basin of approx. 11,500 square miles Life of lease contracts, demand charges and lease dedications Producers include Anadarko, Kerr-McGee, Devon & Dominion First production expected in 2007 All rights reserved. Enterprise Products Partners L.P. 18

Independence Hub San Jacinto DC 618/619 Spiderman DC 620/621 Callisto MC876 MC920 Anchor Field Potential Tie-Back Merganser AV 36/37 Recent Tie-back Discovery Vortex AV 217/261 LR 177/221 Jubilee AV 305/349 LR 265/309 Atlas/Atlas NW LR 5/49/50 Mondo NW LR 1/2 Cheyenne LR 39 All rights reserved. Enterprise Products Partners L.P. 19

Unique Ownership Structure Largest % ownership by Management in energy industry Management interest aligned with limited partners supported by unit purchases Approx. $352 million of new EPD units since October 2002 Acquired remaining 9.9% of EPD GP and 13.5 million EPD units from El Paso for $425 million Will purchase approx. $32 million on Feb.14, 2005 through DRIP GP focused on long-term total return to common unitholders Contributed 50% of GTM s GP to EPD for no consideration Eliminated GP s 50% incentive distribution right for no consideration capped at 25% EPCO & Affiliates Shell 39.3% 9.6% 51.1% Enterprise Products Partners L.P. (NYSE - EPD) Note: Ownership % s are after giving effect to this offering. Public All rights reserved. Enterprise Products Partners L.P. 20

Financial Overview

Financial Objectives Increase cash flows from fee-based businesses Prudently invest to expand the partnership through organic growth, acquisitions and joint ventures with strategic partners Manage capital to provide financial flexibility for partnership while providing our investors with an attractive total return Maintain a strong balance sheet that supports investment grade debt ratings All rights reserved. Enterprise Products Partners L.P. 22

MLP Math: 25% vs. 50% GP Splits Lower Splits = Lower Cost of Capital Savings in Distributions Paid to GP with 25% Splits GP's Share of Distribution Increases 50% $1,000 Cumulative Cash Saved 5-years $671 MM $833 $ Millions $800 $600 $400 10-years $3.5 Billion 25% $200 $0 $37 $77 $125 $182 $250 Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Assumes 8% annual distribution growth 0% EPD VLI BPL PAA NBP EEP TPP KMP EPD Current / Ultimate Peer Ultimate in Highest GP Splits Peer Current All rights reserved. Enterprise Products Partners L.P. 23

Overview of Fourth Quarter Results ($ in millions) Fourth Quarter (1) Year Ending Dec. 31 2003 2004 (2) 2003 2004 Gross Operating Margin By Segment: NGL Pipelines & Services $80 $143 $311 $374 Onshore Natural Gas Pipelines & Services 4 72 18 91 Offshore Pipelines & Serices 0 34 6 37 Petrochemical Services 25 31 76 122 Other 32 Total Gross Operating Margin $109 $279 $410 $655 EBITDA $100 $276 $366 $623 Net Income $34 $115 $105 $268 (1) (2) (1) Unaudited (2) Includes results for GulfTerra since the closing of the merger on September 30, 2004 All rights reserved. Enterprise Products Partners L.P. 24

Pro Forma Capitalization September 30, 2004 ($ in millions) Pro Forma (1) Pro Forma As Adjusted Cash $234 $234 Current Maturities of Debt 607 342 Long-term Debt 3,925 3,924 Minority Interest 61 61 Partners' Equity 5,369 5,635 Total Capitalization $9,962 $9,962 % Debt to Total Capitalization 45.5% 42.8% Debt to 4Q2004 EBITDA Annualized 4.11x 3.87x (1) Pro Forma for this offering. All rights reserved. Enterprise Products Partners L.P. 25

EPD Meets S&P 500 Criteria (1) $Billions $12 $10 $8 $6 $4 Equity Market Capitalization $10 $4 50% 40% 30% 20% Liquidity: Ratio of $ Value Traded to Market Cap > 30% 41% $2 10% $0 EPD S&P 500 0% EPD Financial Viability: Net Income Other Criteria $Millions $150 $100 $50 Public Float > 50% U.S. Based Operating Company $0 1Q04 2Q04 3Q04 4Q04 (1) Currently, partnerships are not eligible for inclusion in S&P 5005 All rights reserved. Enterprise Products Partners L.P. 26

Key Investment Considerations Strategically located assets serving the most prolific supply basins for natural gas, NGLs and crude oil in the U.S. Leading business positions across midstream sector Greater cash flow stability from diversified fee-based assets following the recent completion of GulfTerra merger One of the strongest organic growth profiles in the industry Increasing cash distributions leading to superior returns Lower cost of capital than many of our competitors GP / Management s interests aligned with limited partners Experienced management team with substantial ownership All rights reserved. Enterprise Products Partners L.P. 27

Enterprise Products Partners L.P. Questions and Answers

Non-GAAP Reconciliations Operating income $66 $175 $248 $423 Adjustments to reconcile Operating income to Total gross operating margin: Depreciation and amortization in operating costs and expenses $32 $99 $116 $194 Retained lease expense, net in operating costs and expenses 2 1 9 8 Loss (gain) on sale of assets in operating costs and expenses -- (16) -- (16) Selling, general and administrative costs 9 20 38 47 Total Gross Operating Margin $109 $279 $410 $655 (1) Unaudited (2) Includes results of GulfTerra since the closing of the merger on September 30, 2004 All rights reserved. Enterprise Products Partners L.P. 29

Non-GAAP Reconciliations Reconciliation of Non-GAAP "EBITDA" to GAAP "Net income" and GAAP "Cash provided by operating activities" Fourth Quarter (1) Year Ending Dec. 31 ($ in millions) 2003 2004 (2) 2003 2004 Net income $34 $115 $105 $268 Adjustments to derive EBITDA: Interest expense $ 33 $ 59 $ 141 $ 156 Provision for income taxes 1 1 5 4 Depreciation and amortization (excluding amortization component in int. exp.) 32 100 116 195 EBITDA 100 276 366 623 Interest expense (33) (59) (141) (156) Provision for income taxes (1) (1) (5) (4) Cumulative effect of changes in accounting principal (11) Equity in loss (income) of unconsolidated affiliates (3) (11) 14 (53) Amortization in interest expense 0 1 13 4 Deferred income tax expense 6 3 11 10 Provision for non-cash asset impairment charge 1 0 1 4 Distributions received from unconsolidated affiliates 6 13 32 68 Operating lease expense paid by EPCO, excluding minority portion 2 1 9 8 Other expense paid by EPCO (0) 0 Minority interest (1) 1 4 8 Loss (gain) on sale of assets 0 (16) (0) (16) Changes in fair market value of financial instruments (0) (0) (0) 0 Decrease (increase) in restricted cash used for operating activities 1 (9) (5) (12) Net effect of changes in operating accounts 117 192 121 (49) Cash provided by operating activities $ 197 $ 391 $ 420 $ 424 (1) Unaudited (2) Includes results of GulfTerra since the closing of the merger on September 30, 2004 (1) (2) All rights reserved. Enterprise Products Partners L.P. 30